In a medium saucepan, combine water, butter, salt, and sugar. Bring to a boil over high heat.
Reduce heat to medium. Add flour all at once and stir continuously until the dough forms a smooth ball and pulls away from the sides of the pan, about 1-2 minutes. Remove from heat.
Transfer dough to a large mixing bowl. Let cool for 4-5 minutes.
Add the egg and vanilla essence. Beat with an electric hand mixer until the dough is smooth and glossy.
Transfer dough to a piping bag fitted with a star or round tip.
Preheat air fryer to 375°F (190°C). Generously spray the basket with nonstick cooking spray.
Pipe bite-sized portions of dough into the basket, leaving space between each one. Do not overcrowd.
Brush tops lightly with melted butter. Air fry for 10-12 minutes until golden brown.
While churros cook, mix sugar and cinnamon in a shallow bowl.
As soon as each batch is done, immediately transfer churros to the cinnamon sugar mixture and toss to coat evenly. Add a light brush of melted butter first if coating isn't sticking.
Repeat with remaining dough in batches. Serve warm with chocolate sauce, Nutella, caramel, or honey for dipping.
